Dec 27, 2008

Business - 10 Indian MFIs in global top 100 ranking

Anita Bhoir

Mumbai: Indian microfinance institutions (MFIs) feature the most in a global list of the top 100 firms, as ranked by US-based Microfinance Information Exchange Inc. (MIX).

The annual MIX Global 100 Composite Ranking features 10 Indian microfinance institutions in the list topped by Indonesia’s MBK Ventura, which has at least 64,000 borrowers. India’s SKS Microfinance Pvt. Ltd, with more than 1.6 million borrowers, has slipped from the top slot to second position.

Cashpor Micro Credit, Sarvodaya Nano Finance Ltd, Evangelical Social Action Forum (ESAF), Spandana Sphoorty Financial Ltd, Aadarsha Welfare Society and Centre for Rural Reconstruction through Social Action are the other Indian microfinance institutions in the list’s top 50.The MIX list selected the top 100 institutions from a sample of 652 firms based on three key attributes: outreach, efficiency, and transparency. The performance of these institutions was measured for each area relative to other firms in the sample. “Leading the South Asian contingent, India was the only country with 10 or more MFIs in the ranking, seven of which scored in the top 50,” MIX said in the report. “Five other countries posted five or more MFIs, including Cambodia, Bosnia, Colombia, Ecuador and Morocco.”

Indian microfinance institutions in the top 100 averaged above 50% growth in borrowers over the previous year, the report shows. SKS Microfinance more than tripled the number of its borrowers during the year to cross the one million mark. “Top-level efficiency also boosted their ranking, as Indian MFIs in the composite ranking kept costs to less than a quarter of the average, at 1.5% of gross national income per capita, buoyed by low labour costs and high productivity,” MIX said.“The interest rates in select South Asian economies are higher when compared with India. This reflects on the margins of Indian MFIs,” said M.R. Rao, chief operating officer, SKS Microfinance. “Interest rates charged in Sri Lanka are anywhere in the range of 33-36%, while in India we charge an interest rate of 24-25%.” But SKS has decided to go slow on acquiring new customers because of the credit crunch. “We have also decided to go slow on branch expansion considering the existing economic environment... Once the liquidity situation turns we will begin acquiring new customers,” said Rao.India had 216 microfinance institutions with a loan portfolio of up to Rs5,898.2 crore as at end-March, according to the Bharat Microfinance report of Sa-Dhan, an association of development finance institutions.